Stamp duty: What is it and how much do I pay?

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House hunting in Leek, StaffsImage source, Getty Images

The Conservatives have pledged to keep the stamp duty threshold at £425,000 for first-time buyers if they win the general election.

The threshold was increased in 2022, and was due to fall in March 2025.

What is stamp duty and who needs to pay it?

  • buy a freehold property

  • buy a new or existing leasehold

  • buy a property through a shared ownership scheme

  • take on a mortgage or buy a share in a house

The amount of stamp duty you owe depends on the cost of the property, whether it will be used for residential purposes or not, and whether you own any other property.

How much is stamp duty?

Buyers of homes worth less than £250,000 don't pay stamp duty. The threshold is £425,000 for those buying their first property.

  • £0-£250,000 (£425,000 for first-time buyers) = 0%

  • £250,001-£925,000 = 5%

  • £925,001-£1.5m = 10%

  • £1.5m+ = 12%

If you already own a residential property worth £40,000 or more, and you buy another (or a part of one), you have to pay an additional 3% on top of the rates above, external.

Stamp Duty Land Tax (SDLT) raised £15.4bn for the government in the 2022/23 financial year, external, a 9% increase on the £14.1bn raised in 2021/22.

What do property buyers pay in Scotland?

In Scotland, the current rates for the Land and Buildings Transaction Tax, external (LBTT) are:

  • £0-£145,000 (£175,000 for first-time buyers) = 0%

  • £145,001-£250,000 = 2%

  • £250,001-£325,000 = 5%

  • £325,001-£750,000 = 10%

  • £750,001+ = 12%

Purchasers who already have a residential property also have to pay an Additional Dwelling Supplement (ADS), external on top of LBTT if their share of the new property is worth £40,000 or more. The ADS is 6% of the purchase price.

This includes people buying a second home, a rental property or a holiday home.

What do property buyers pay in Wales?

In Wales the current standard rates for Land Transaction Tax, external (LTT) are:

  • £0-£225,000 = 0%

  • £225, 001-£400,000 = 6%

  • £400,001-£750,000 = 7.5%

  • £750,001-£1.5m = 10%

  • £1.5m + = 12%

Purchasers usually have to pay the higher rate of LTT if they:

  • buy a residential property worth £40,000 or more, and

  • already own one or more other properties

The higher rates of LTT are:

  • £0-£180,000 = 4%

  • £180,001-£250,000 = 7.5%

  • £250,001-£400,000 = 9%

  • £400,001-£750,000 = 11.5%

  • £750,0001-£1,500,000 14%

  • £1.5m + = 16%

Image source, PA Media

When do you have to pay it?

You have 14 days to pay stamp duty from the date of completion in England and Northern Ireland.

In Scotland and Wales you have 30 days from the point of purchase.

If it takes longer, you could face a fine, or be charged interest on the duty you owe.

How do you pay it?

House buyers often pay via their solicitors, but you can also pay directly online, or by cheque or cash in many banks.

It is also possible to add stamp duty to mortgage loans and increase your debt to cover the cost of the tax, but you could end up paying significantly more in interest payments.